Stocks Higher Looking Ahead to Possible Fed Announcement

Hemera/Thinkstock(NEW YORK) -- U.S. stocks rallied Tuesday, apparently in anticipation of a Federal Reserve announcement to further loosen lending in the U.S. economy.

The Dow climbed 96 points to 12,837. The Nasdaq added 34 points to close at 2,929, and the S&P gained 13, closing at 1,358.

While there is widespread speculation, it’s not certain that the Fed will make a major announcement Wednesday. The central bank may hold off on a new plan instead -- just reiterating a willingness to act if the economy worsens.

It’s difficult to see how much more of an impact the Fed can have. Interest rates are already at record lows, but banks are still reluctant to lend and companies are still sitting on a lot of cash.

The Fed is also expected to announce a revised forecast for unemployment and GDP growth for the coming months. Somewhat gloomier forecasts won’t exactly be a surprise.